Do I have to have an escrow account?
Most lenders automatically set up escrow accounts, which are also called “impound” accounts. The lender collects monthly payments for property taxes and homeowner’s insurance in addition to your mortgage payment.
The lender deposits these payments into the impound account and pays your taxes and insurance payments when they are due.
Impound accounts are helpful if you need assistance putting aside money to pay your tax bill and annual insurance premium. But, you have to rely on your lender to make your payments on time. And, you don’t earn interest on your money in the impound account.
If the down payment on your loan is at least 20%, you may be able to refuse the impound account. If you prefer to pay your property taxes and homeowner’s insurance on your own, let your lender know when you apply for the loan. Don’t wait until closing.
Also, be aware that your lender may charge a fee for waiving the escrow account. It doesn’t hurt to ask the lender to reduce or eliminate this fee.

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